How soaring food price ruins millions

By The guardian team

12th May 2012

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President Jakaya Kikwete (C), with other heads of State discussing African economic affairs at the World Economic Forum in Addis Ababa, Ethiopia yesterday. Back home President Kikwete is facing a serious challenge about the worsening inflation resulting mainly from soaring food prices. (Photo; State House)

Six years ago, when 43-year-old James and a father of two daughters who lives in Dar es Salaam’s Kawe suburb, gave Tsh 100, 000 to his wife for shopping, he got a bag of charcoal, 10 litres of kerosene, 20 kilogrammes of rice, 10 kilos of maize flour, 10 kilogrammes of beans, 10 kilogrammes of sugar and 10 kilos of meat, which were the basic foodstuff they needed to survive.

After shopping, his wife remained with Tsh 11, 000, which she used to buy other necessary kitchen items such as onions, tomatoes, edible oil and salt. The Tsh 100, 000 budget could at least sustain James’s family for 20 days, before some items would have to be purchased again.

But today James, a painter whose monthly income is approximately Tsh300, 000, faces a bleak future as inflation surges ferociously, adversely impacting the basket of items he used to budget for with his meager income six years ago.

Today, the Tsh 100, 000 can only afford a 100-kg bag of charcoal, 20 kilogrammes of rice and 10 kilogrammes of sugar, thanks to the untamed inflation that is ruining millions of other families in Dar es Salaam and the country at large.

Millions of Tanzanians like James are struggling and finding it hard to put food on the table owing to the soaring food prices.

Though government statistics put the current inflation rate at 24 per cent, up from a single digit in 2006 when President Jakaya Kikwete took over as the head of state, the reality on the ground paints a gloomier picture than official data shows.

The economy, in the common man’s perspective, paints a bleak future and casts doubt on the government’s ability to curb the soaring cost of living, which is fuelled mainly by higher food prices.

According to a survey of food prices conducted by the Guardian by comparing inflation levels in 2006 and today, the prices of some basic foodstuff have skyrocketed by 100 per cent.

For instance, while in 2006 a bag of charcoal weighing 100 kilogrammes cost Sh 15,000, today the same costs consumers between Tsh 40,000 and Tsh 50,000. Charcoal is the biggest source of energy in most parts of the country, especially in urban areas. In 2006 a 30-litre gas cylinder was costing Sh 28, 000, but today the same costs an average of Sh 55, 000.

In 2006, a kilogramme of rice was sold at an average price of Tsh 700, but today the same costs between Tsh 2,100 and Tsh 2,800, depending on the grade and quality. Sugar, the sweet but deadly commodity if consumed carelessly, used to cost an average of Sh 800 per kilogramme then, but today it costs Sh 2,000 a kilogramme.

The year 2006 was the beginning of the current government’s slogan of better living for every Tanzanian, which was however thwarted by power rationing and record-high fuel prices at the global market, which reached $140 per barrel of crude oil.

However, at that time the shilling was trading at Sh 1,300/-against the US dollar while inflation was at a single digit, standing at an average 9 per cent. Today, the shilling has lost its value against all major foreign currencies, trading at Sh 1,600/- per dollar, thus hurting the economy badly because the country imports more than it exports.

As Tanzanians waited eagerly for the promised better living, their hopes gradually fading as the economy continued to perform abysmally, though in 2008 oil prices dropped dramatically to $65 per barrel in the wake of the global credit crunch.

Oil is one of the major factors which play a crucial role in reducing or increasing food prices, because high transport costs caused by soaring fuel prices are finally borne by the final user, the consumer.

From 2009 till today, fuel pump prices have been on the increase due to various factors, including the weakening shilling against major foreign currencies. When oil prices soar, they not only affect motorists, but everyone is affected in different ways.

In the past six years during which Tanzanians have witnessed the soaring of food prices the government has remained almost silent, without any effective measures being taken to cushion consumers against the worsening inflation.

Today a kilogramme of maize flour costs between Sh 900 and Sh 1,200, three times what it cost about six years ago, while a litre of kerosene currently costs Tsh 1,900, up from Sh 900 which it cost in 2006.

Today a kilogramme of beans is sold at the retail price of Sh 1,500/-, up from Sh 600/-it cost six years ago, while a loaf of bread that used to cost Tsh 600 then now costs between Sh 1,200 and Sh 1,800, depending on the quality, as wheat flour, sugar and other ingredients surge due to high transport costs and scarcity in the market.

Ironically, the situation seems to have outsmarted the government, especially the ministry of Finance and the central bank, whose primary role is to curb inflation. While prices of basic commodities have increased by an average of 100 per cent, salaries in the public and private sectors have marginally increased.

According to the Bank of Tanzania, inflation minus food prices is just 8 per cent, which means that a surge in food prices accounts for over 80 per cent of inflation. With the production of food declining due to inadequate rainfall and lack of effective measures to boost agriculture, especially in the key producing regions, Tanzanians have literally been abandoned to deal with spiralling food prices.

Ironically, while food production has been declining in the past few years, domestic demand has been increasing dramatically, triggering hyper inflation in the country.

As Tanzanians struggle bitterly to face the worsening inflation, policymakers and politicians seem to be taking it in stride, perhaps because they believe that this is ‘another blowing wind’ that will come to pass. Neither the National Assembly nor the cabinet seems to have adequately addressed the situation so far, casting doubt on whether the administration is really concerned about by the effects of the current inflation rate.

With about four weeks before the national budget is tabled in Parliament, the future looks bleak because preliminary indications show that the exchequer doesn’t have any concrete measures up its sleeve to address the rising cost of living as well as inflation.

Though the newly appointed Minister for Finance, Dr William Mgimwa, said this week that curbing inflation was one of his top priorities, he didn’t explain clearly what measures would be taken to cushion consumers against the worsening situation.

The most puzzling situation is that while the cost of living has gone beyond the means of millions of Tanzanians, policymakers and politicians, including those from the opposition, seem to be occupied with petty issues revolving around the two camps.

No party has so far addressed the current soaring food prices seriously and put the government under pressure to act. In most speeches at political rallies, the word ‘inflation’ is a rare terminology because, to our politicians, it doesn’t send any shock waves compared to power shedding, Dowans, Richmond and what have you.

At the end of the day it’s the common man who bears the brunt.

“They are busy politicking, but we are suffering as food prices soar dramatically…we want to know what the politicians and policymakers are doing to make our lives easier.” James said this week as he narrated how the soaring food prices have affected his living.

Central bank Governor Professor Benno Ndulu said recently that he is optimistic and confident that the situation would improve by the end of this year. He made the claim when speaking to the Guardian, saying inflation would be reduced to a single digit by the end of the year.

Governor Ndulu said although his office had tried to intervene, two factors were to blame for the high inflation rate. The factors are food prices, especially of cereals and sugar, and fuel.

“It must be understood that the core inflation, resulting from the liquidity (amount of money on the circulation) has been steady at 8.7 percent for a number of months, as we have managed to control it, but it has been difficult to deal with the other type of inflation because it is determined by foreign factors,” noted Professor Ndulu.

He mentioned one of the major factors as fuel prices which for a so long time have remained unstable in the world market, but in the case of Tanzania they have consistently remained high.

“Let’s hope that by June and July fuel prices will go down a bit, and even better later on towards the end of the year. We hope also that crises among influential nations and oil producers would be resolved and thus ease prevailing difficulties on our economies,” he added.

A survey published in January 2012 by a non- governmental organization, Twaweza, shows that there has been a decrease in food consumption, a situation attributed to the high prices of foodstuffs.

The survey results show how the soaring food prices directly affect low-income households which could not afford three meals a day, bringing the number down by 20 percent since the baseline survey was conducted in 2010.

It (the survey) was based on mobile phone interviews involving 358 residents in the three Dar es Salaam districts of Ilala, Temeke and Kinondoni and focused on their food consumption and their perception of their economic situation.